Are there more poor families with children in New Zealand this year?

Jess Berentson-ShawEconomics6 Comments

Last week the Ministry of Social Development annual reports on the incomes and material wellbeing of New Zealanders were released. The release happens at the same time every year and results in the same quibbling over the measures of poverty and whether there are or are not 300,000 plus children who are ‘poor’ and whether there is any real poverty in New Zealand.

The left say ‘more children are poor’ (pretty unclear really) the right say ‘fewer people are poor or at least it is not getting worse’ (how being at a standstill on this is a good thing I will never know). Outside the echo chamber of Wellington the public is left thinking ‘yeah but really are there poor kids and what can you do anyway’? And again the critical action is not taken to ensure all children thrive.

If children were plants in the tropical rainforest garden of Aotearoa then some plants are getting little or no attention and care.

The measures- we need more than one

We have previously discussed the pros and cons of the various measures we use in New Zealand to figure out whether people, families, children have enough (whether that be enough income or wealth, or too much debt etc) to fully participate in New Zealand society, but lets go over it again!

We have income measures – relative and fixed, in which ‘income poverty’ is set at various points based on the current median household incomes (not the mean). Families that fall below these lines are considered ‘income poor’. We can use the relative measure to see that this year there are for example 295,000 children who are living with an income that is below 60% of median income. To put that in context the median household disposable income (so after we account for all taxes and remove housing costs) last year was $56,400 – this is for all types of households and 60% of that is $33,840. The relative measure is good for seeing whether the incomes of children living below this line are getting closer or further away from the median (so for those families on low incomes are their incomes getting lower?), but it does not say that all these children are ‘failing to thrive’ and it does not tell us about the pattern over time.

The fixed income measure tells us what has happened over time, has that group on low incomes got bigger or smaller. The fixed measure can help us see what if any impact economic conditions and more importantly government social policy is having on incomes.

Then we have all the material measures. So these measure what families can afford to buy and what they can afford to do with their children. We have a load of these, some specific to New Zealand and some good for international comparisons. The EU-13 measure for instance tells us how many of 13 basic items that families need to survive, are children missing out on. Food, shoes, warm house, being free from late bills, the ability to holiday away from home for 1 week a year, computer and internet access etc. These items of course are relative as well, because what we think is critical for survival in New Zealand society today is going to differ in 10 years.

We have combined measures where both income and material measures are put together to give us a “severe poverty’ measure.

It would be ideal to include wealth measures too, but we have a shocking lack of wealth measures that we collect regularly, which is just plain out silly. Whether we own a house outright, what our health costs are, debt, investments, money in the bank all have a bearing on how well or not a family is coping.

Business as usual for the poor in 2016

So the new report tells us that for low income families and children in New Zealand their opportunities are staying low. They are not getting considerably worse, but there are large numbers of kids are not getting some of the necessary care to help them thrive. In other words, we are consistently doing a poor job at giving all plants in our garden a chance to flower.

Here is the data from 2015 and 2016

Percentage of Poor Children
Child Income Poverty In New Zealand 1980 to 2016
Source (Perry 2016)

The big problem is that we stopped watering parts of the garden in the late 80s and early 90s

Deregulation and the mother of all budgets meant a group of children in New Zealand stopped getting what they needed to thrive, and they never got it back. We helped some families in the 2000’s with Working for Families, but given that was extra ‘water’ was for the middle low group, the poorest of the poor stayed in the barren and unfertilised soil in the shady part of the garden, and the imbalance between low income children and other children got worse.

Here is one figure that shows the pattern of low incomes in children since the 1980’s. The graph shows a bunch of different measures, but the main thing we are looking at here is the trend – notably the steep rise in the 1990s when the “Mother of All Budgets” was unleashed and families disproportionality affected by the deregulation of the New Zealand economy had their safety nets shredded. At this time market rents on state houses were also introduced. There has been some bouncing around since then, the introduction of Working for Families in the early 2000’s improving things for those who were less poor (i.e. two parents and working) and then we see a rise again with the Global Financial Crisis.

Porportion of low-income children
Child Income Poverty In New Zealand 1980 to 2016. (Perry 2016)

Below is another figure; this time it measures material hardship. The interesting thing to note about this graph is the over 65’s saw no worsening in their hardship rates during the Global Financial Crisis while the children did (could that be because of the universal benefit we call superannuation?). So children are now back to what they were pre GFC. Whoopee! (not really). While Government increased benefits slightly in the 2015 Budget, hardship rates have not moved. That could be because beneficiary families are actually not getting that $25 in the hand or because it is just not significant enough for very poor families to address the financial stressors in their lives or because the other conditions place on them to get the money don’t create a net gain or improve their lives.

Below threshold
Material hardship in New Zealand 2007-2016 (Perry 2016)

So what to do?

In New Zealand having money (income, wealth, being free from debt) is the most important thing that gives children the chance to thrive. To be healthy and to be successful. These children have a supercharged opportunity to bloom.  Children on low incomes don’t get that same opportunity. Sure other things matter, but money matters most. As we will discuss in detail in our book on this issue (due out early next year!), children born of the same innate ability in New Zealand will bloom or not according to how well off their parents are. We are hardly the land where everyone gets a fair go. Yet most New Zealanders want this future. They want us to be bold, brave and support all children and families. And it can be done. It is humanly possible.

Low-income parents are working hard to give their kids a shot. We can ensure effort comes to fruition

Those on low incomes are neither helpless or hopeless. Many work, harder than most of us (two jobs often). They love their kids deeply and want the best for them. What that best looks like for them may differ from what it looks like for you, but the intent, the effort, the desire for children to thrive is the same. So these parents need support to ensure their hard work leads to great outcomes for their kids too. The best way to do this? More money of course! And oh, we also probably need to fix the housing crisis.

You can read Bryan Perry’s excellent and thorough reports on trends in household incomes material wellbeing in New Zealand here

Are there more poor families with children in New Zealand this year? was last modified: September 13th, 2016 by Jess Berentson-Shaw
About the Author
Jess Berentson-Shaw

Jess Berentson-Shaw

Dr Jess Berentson-Shaw is a science researcher working for the Morgan Foundation. Jess holds a PhD in Health Psychology from Victoria University.Jess has over 10 years’ experience working on applying science and evidence to public policy. She worked on improving the use of science in public health practice in NZ, before working as a Research Fellow at University College in London, where she researched how doctors and clinicians translate scientific evidence into their clinical practice. While in the UK she also developed a national data collection system, which was used to determine what factors contribute to poor outcomes for women and babies during pregnancy and birth. On her return to New Zealand she directed a research group that specialised in the independent evaluation and application of research and science to health policy and practice. Jess loves science and what it can do to make the world a fairer place.

  • Elaine Dyett

    I have been volunteering with the Red Cross helping former refugees to settle in NZ. I have been with them to work and income to get a fridge and washing machine. They get this as part of a settlement grant unlike NZers who have to pay this back. The amount of money they get given is very low just to live on let alone pay back any amounts borrowed from the government.
    The former refugees get volunteers assigned to them to ensure they get what they are entitled to and get the best deals for electricity an phones etc. I have read about a scheme in the USA where volunteer university students assist the poor to get the knowledge and access to the support they need to get out of poverty. It take a great deal of skill and knowledge to live on the smell of an oily rag, many I think would appreciate an advocate or support person to help them.

  • Who was it that said there are lies then there are statistics It seems the government is really good at massaging the data to make themselves look good. Keep the CPI down, so wages stay down and then say nothing is wrong
    All you have to do is see the homeless on the streets now ,{Where were they 10 years ago}
    And then look at the increases in grocery prices every week, and tell me thing, are not getting dearer
    I think Key wants a 3rd world economy so the exporters can compete on the world market, And feather the nest of the top 10% of the country

  • Helen Jackson

    I bet I am going to get shot down with my opinion……but……. Why do couples have children when they cant afford them ?? Forty years ago approximately when we decided to start a family , we were on one basic wage….So we only had one child.Definitely could not afford another. He played sport, was a good student, went to University, and definitely stands on his own feet since he was about 25 yrs old. BUT… for us as parents, there was no way we could have afforded to have a second child as it costs a huge amount of money to bring up a child, even without the Mobile phones, ipads, Play station, all the latest fads and fashion that for some reason parents think their kids must have. It is financially tough to be responsible parents for ONE child let alone 2 or 3 which most couples have now. We as parents did not socialize because we just did not have the money. Have we been disadvantaged, I don’t think so. We now own our house and live comfortably without any latest posh stuff. Instead of handouts of food to kids at school with breakfast and now I read that free lunches are also provided in some schools……. why not spend that money WISELY and TEACH the parents how to budget, buy practical healthy food, and have Family cooking sessions where the kids also learn how to prepare food and cook it. How are today’s kids going to learn how to provide for themselves if this bad situation of HAND OUTS is not changed and to educate the parents as to how to do it for their kids. After all, kids learn from their parents. They don’t need Charity, they need help in learning how to do it for themselves and gaining one whole heap of self respect………. not the attitude that we will produce and the rest of the country will look after our kids……. help the Parents of hungry children. teach them HOW to budget, buy healthy basic food, and then these parents will have so much more self respect and can hold their heads high. They have been over looked in the most important part of education… LIFE SKILLS.

    • David Washer

      This is all very well, but the people we are talking about are simply not being paid enough to be in a position to listen to the type of well meant advice offered here: they are trying to survive the ‘now’, not plan for a ‘future’ that is out of reach. And on your point about having children, many people had children before their crisis hit (when they could afford them), but due to changed circumstances now have to survive on low wages and high rents. Most low income earners are, or become very quickly, excellent budgeters out of necessity. As a budget advisor myself, I see people who find themselves in financial strife for a variety of reasons, but invariably those with children are making great personal sacrifices to ensure their children get as good a chance as possible. I am repeatedly amazed at how resourceful some people are, simply to survive. As a society, if we continue to pay peanuts to those at the bottom of the pay scale, while those in the top 10% cream it and manage their affairs to limit their tax contributions, we will not resolve this issue.

    • pixman55

      Helen Jackson i will Agree with your sentiment here. I have Met Many “Solo” Mums who Chose to Get Pregnant to get Winz off their Backs about Being Unemployed .Many Did not want to Work as Prostitutes in the Massage Parlours to get a Job. as it is the Main Job advertised for Women these days .I Know a few who Worked as Escorts before the Law Changed to make Prostitution a Legal Job. . I Knew a few vWomen who Had a Second or Third Child Just to Stay on the DPB when a child was 5 years old again Because they were Told you Must get a Part Time Job. once again the jobs available were as Prostitutes or factory workers or Shop assistants on Minimum wage .and Of Course when you Work you get Penalized by Winz for Earning over $80 a week. in fact they get Less for working 20+ hours a week than for doing Nothing. , So the Government trying to SAVE Money is actually costing the Country More with their punitive Measures .i myself am 61 but am turned down for jobs because they want a Younger person..i did get a few days work but was punnished by Winz because the Boss did not sent them my payment details . so they charged me $90 as i was Over Paid. i disputed the fact as it was the Boss who let me down. i to;d Winz What i Recieved in the Bank .asa i had No idea of the Gross/net? amount but they have done an investigation After i supplied a letter from the Boss who Said it was Not My mistake without Admitting it was Her Mistake 😉 the point is i had to Spend $41 to travel to the Auckland office to speak in person to them. i asked how much Winz had Spent on the Investigation. it would have Been More than the $90 they say i was Over Paid but that is Government Beaurocracy Punnish the Person on a Benefit even if it Costs Double the Debt ..i had to go with out Food in order to have thje Travel costs to attend the Meeting .

  • pixman55

    The Government Should Offer Free IUDs or Contraception Injections to All Women on Benefits to Prevent Pregnancies .Even an Incentive Bonus Payment to Encourage Women to Get an IUD. that Would Stop more Children Being “Born into Poverty” really simple Solution. any Woman who Refused would have the Benefit Cut and be Punished if they Got Pregnant .Shocking but the only way to Reduce the population of Children in Poverty . it is Not Fair on the Child. .to grow up in Poverty. I had a Son Only One after My Ex Chose to Get Pregnant . After saying she WAS on the Pill. Then she said if You leave or Claim it is Not Yours you Will Never See the child again ..Emotional Blackmail. So we stayed together i gave up my Low paid Job to Stay and Care for our Child as My Ex got Paid More in her Job. and had a Disability which Meant she would Need help to Care for a Baby 3 years later i discovered she had been having Affairs While i Cared for Our Child. She had the house in Her Name so Kicked me out 6 months later and said her New Boyfriend was Moving in. Then She Told My Friends that the Chiold was Not Even mine and tried to convince them to Make me Give up the Custody Battle . .As a Male i Had to pay Child Support after She won Custody Even after i Proved i was the person who Cared for him Full time for 3.5 years .so i had to Pay a chunk of my Pay each week even Though i had Travel Expenses to pick him up for weekends and For A Week or More. in School Holidays when i Did Not Get Paid as i was a Contractor. I Got Deeper into debt Never had Another Girlfriend as i Had NO Spare money. so My Son Turned out OK He Knows the Sacrifices i Made for him .but he Never went without …I did.